The concept of a credit score has become an essential part of India’s financial landscape, playing a major role in determining your eligibility for loans or credit cards. Here’s a breakdown of the average credit score in India, what it means, and how you can improve yours.
1. What is a Credit Score?
A credit score is a three-digit number ranging from 300 to 900, reflecting your creditworthiness. It is based on factors such as:
- Repayment history
- Credit utilisation
- Length of credit history
- Types of credit accounts
- Recent credit inquiries
2. Credit Score Ranges in India:
- 750 to 900: Exceptional – Higher chances of loan approval and lower interest rates.
- 700 to 749: Good – You can still get credit, but terms may not be as favourable.
- 650 to 699: Fair – You may face higher interest rates on loans.
- 600 to 649: Poor – Credit approval is tough, and interest rates are likely to be high.
- Below 600: Risky – Urgent action is needed to improve credit health.
3. What’s the Average Credit Score in India?
According to a TransUnion CIBIL report, the average credit score among individuals who monitor their credit is 729, while those who don’t monitor have an average score of 712. Monitoring your credit score regularly can help boost it!
4. Credit Score Insights:
- Salaried vs. Self-employed:
- Over 25% of salaried individuals have a score above 770.
- Only 14% of self-employed individuals have an excellent score.
- Urban vs. Non-metro:
- 24% of metro consumers and 22% of non-metro consumers have strong credit scores, showing similar credit behaviour.
- Cities with Healthy Credit Scores:
- Bengaluru, Ahmedabad, Mumbai, Pune, Chennai, Delhi, Hyderabad, Surat, Coimbatore.
5. Benefits of a Strong Credit Score:
- Easier access to loans and credit cards with better terms.
- Lower interest rates on loans.
- Pre-approved loan and credit card offers.
- Premium credit cards with enhanced rewards.
- Higher loan amounts and credit limits for greater financial flexibility.
6. How to Improve Your Credit Score:
- Timely repayment: Pay credit card bills and loan EMIs on time.
- Limit credit applications: Avoid submitting multiple loan applications at once.
- Check your credit report regularly: Correct any errors.
- Maintain a low credit utilisation ratio: Keep usage below 30% of your total credit limit.
By following these simple tips and monitoring your credit, you can build a strong credit profile and enjoy better financial opportunities.